After all this time, it still amazes me that business owners don’t understand the importance of having good records. As often as I have run into it over the last 30+ years, it shouldn’t surprise me anymore. They usually hire a bookkeeper and a CPA to do their taxes and then forget about it.
The problem? It’s not enough. I truly believe that an owner who understands the importance of good numbers is one of the main things that separate successful businesses from those that fail.
So, let’s try again. The following are the main reasons that every business owner should make having accurate, timely financials a priority:
- Lack of adequate recordkeeping is a major cause of business failure.
- If you don’t understand your numbers, you can’t manage them.
- Good accounting records allow the owner to make informed, data-driven decisions.
- Businesses with good accounting records are less likely to overpay their taxes.
- When your business is audited by the Feds or by the state, good records go a long way toward reducing your exposure to additional taxes and the resulting interest and penalties.
- Good financials allow the owner to avoid operating in a vacuum. They can spot trends much earlier.
- Good financials help the owner increase sales by spotting customers that reduce their sales and following up quickly to solve the problem and recover the customer.
- Good financials help prevent or detect fraud quickly.
- Companies with good records almost always make higher profits than a similar company with poor records.
As important as having good records is, there really is no good excuse for not having good records. So, why don’t you?